Landlord Policy vs. Homeowner's Policy?

With the turbulence of the sub-prime mortgage market, has your client set them self up to lose their rental property?

Over the last three years I have seen more and more people request their rental property be insured as a primary residence or a second home. The only reason being is because they are buying the property and saying it is their residence, not being able to qualify to buy the property for an investment. Beside the fraud incurred with getting the loan they open themselves up to all kinds of headaches with the insurance.

Most homeowners policies have liability exclusions for rental properties. If someone gets hurt on the property there is no coverage. You also have no loss of rents coverage or no coverage if the tenants vandalise the dwelling before vacating. Insurance companies can deny a claim if the named insured is not a resident.

So what happens in the event of a loss that is not covered. A foreclosure, maybe bankruptcy, maybe a lawsuit or multiple lawsuits, judgements, etc. Do your clients a service and make sure that they are properly insured?

The cost of insurance is not what you pay on an annual basis, but the cost of the unpaid claim.

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